2.1 How does the Car Benefit Scheme work?
An employee gives up part of their gross salary, in exchange for a non-cash benefit – in this case a brand new car. The salary is sacrificed before Income Tax and National Insurance is calculated, resulting in a saving on the benefit.
The car is owned by and registered to Tusker. The employer and Tusker enter into a contract to provide vehicles to eligible employees. The Salary Sacrifice Agreement is between the employee and the employer. Tusker provides a templated HMRC compliant agreement and scheme policy.
All your employees get a fully inclusive motoring package for a fixed monthly amount. They also benefit from fantastic discounts from car manufacturers, plus there are no credit checks or any deposits required.
2.2 What’s included in the Car Benefit Scheme?
- A brand-new car of the employee’s choice
- Maintenance of the vehicle including all servicing, batteries, exhausts and tyres (excluding winter tyres) under normal wear and tear conditions. This excludes any damage to the vehicle and updates to satellite navigation systems
- Fully comprehensive motor insurance including all business travel. Any additional drivers are insured for social, domestic and pleasure purposes only unless requested otherwise
- Accident Management
- Total Loss Protection
- Protection against the driver leaving employment
- Annual vehicle tax
- Roadside assistance
- Relief car for when the car is off the road
2.3 What’s not included in the Car Benefit Scheme?
- Top up oil, lubricants, screen wash and AdBlue if needed between services
- Damage to the vehicle if not covered by the motor insurance
- The termination charge if the driver decides they no longer want the vehicle
- The motor insurance excess, in the event of an accident, which is payable when repairs are carried out to the car
- The excess mileage charge if the driver exceeds the agreed mileage as selected by them at the beginning of the agreement
- Mechanical failure due to driver fault
2.4 What is Benefit in Kind (BiK) and how is it paid?
All the cars on the scheme are company cars and therefore attract Benefit in Kind if the car is available for private use by the employee.
For Ultra Low Emission Vehicles (ULEVs), which are cars with CO2 emissions of 75g/km and below, you will pay tax on the Benefit in Kind as determined by its P11D value (list price, including extras and VAT, but without the first-year registration fee and vehicle tax), multiplied by the BiK rate which is based on its CO2 emissions and fuel type. This figure is then multiplied by the employee’s tax rate (e.g. 20%, 40% or 45%) to calculate the amount of tax to be paid.
For cars with CO2 emissions above 75g/km, the taxable benefit will be determined by either the employee’s gross salary sacrifice amount for the car (excluding any additional services) or Benefit in Kind value (as calculated above), whichever is the greater.
Tusker will do what we do best and make the complex simple. The online quoting system will automatically calculate the monthly Benefit in Kind and will factor this into the net monthly amount that is shown for each car.
Benefit in Kind is either deducted from the employee’s salary by payroll or a change in their tax code.
2.5 What happens if and employee decides they don't want the vehicle any longer?
The employee who orders a Tusker Car is committing for the term they select. If they decide they no longer want the vehicle they can obtain an early termination quotation at any time during the term of the scheme, but they will be responsible for the early termination charge.
2.6 What happens if an employee with a Tusker car resigns before their agreement is up?
If an employee notifies their employer that they wish to resign during the first 6 months commencing from the delivery date of their vehicle, or if they resign and leave their employer without giving prior notice during the first 6 months following delivery, they will be liable for an early termination charge to exit the scheme.
If they know that they’ll be leaving their employment before the end of the agreement they should not take a car through the scheme.
If they resign and leave their employer after this 6-month exclusion period, an arrangement is in place to cover the early termination charge.
2.7 What happens if an employee with a Tusker car goes on maternity, paternity or adoption leave during their employment or has a long-term absence from work?
Where the employee is absent from work and their pay either falls below the statutory minimum levels or they are in receipt of no pay in any month during periods of maternity, paternity or adoption paid leave, the employee will continue to have use of the car.
Where an employee is absent from work for other reasons, the Salary Sacrifice Agreement will be suspended for that month. When they return to work, the Salary Sacrifice Agreement will resume and continue for the remaining number of months. This may result in the salary sacrifice continuing after the car has been returned.
2.8 What happens at the end of the agreement?
The majority of employees choose to order a new car through the scheme (the delivery of the new car will be arranged to coincide with the return of the old car). Alternatively, the employee can choose to purchase the car outright or simply leave the scheme altogether.